On Friday, KELOLAND Investigates brought you the much-anticipated special audit of Mid Central, which follows grant money for the GEAR UP program and others into and out of the Platte educational cooperative.

Much of what state auditors reported confirms what our investigations had already uncovered, from conflicts of interest to overpaid consultants and evaluators, as well as inconsistencies in accounting of the millions in federal money that flowed through its doors. 

But there is also a lot that the report doesn’t tell us.

KELOLAND News Investigates has analysis of these latest reports from a former grant writer and non-profit consultant. 

You may remember Michael Wyland. He’s the expert we asked to look over South Dakota’s 2011 grant applications for GEAR UP after we obtained it through the Freedom of Information Act. 

The U.S. Department of Education told us it had destroyed the state’s 2005 grant application, but Wyland obtained it for KELOLAND News. 

Wyland says while the auditor’s report includes a lot of finger pointing about who was really responsible for the millions in misappropriated grant money, of which $1.4 million is still missing, there’s plenty of blame to go around. 

“Frankly, it surprised me that the misappropriation of funds was close to $8 million,” Wyland said.

That’s how much the Auditor General’s latest report says Scott and Nicole Westerhuis secretly took out of Mid Central’s bank account to cover expenses of the non-profit organizations they formed to receive the GEAR UP grant money.

That shouldn’t come as a surprise to long-time Mid Central auditor Randy Schoenfish who testified in court in March that he saw Mid Central was bankrolling the other organizations. 

In fact, the Schoenfish 2014 audit noted that there were errors and omissions and that this was the 8th consecutive audit in which similar deficiencies had occurred. 

Schoenfish testified when he found red flags, he met with Mid Central Director Dan Guericke, Scott and Nicole Westerhuis and Assistant Business Manager Stephanie Hubers, but not anyone from Mid Central’s Board. He said he trusted Guericke to inform the board. 

However, Mid Central’s board says it never knew about any problems and in its response to the Auditor General’s latest report, blamed both the South Dakota Department of Education for not having enough oversight and that the Westerhuises’  would “blatantly lie” to the board about financial discrepancies.

“That certainly doesn’t mean that the trail ends with Scott Westerhuis or even Scott and Nicole Westerhuis.  There were a lot of other people who handled a lot of money; that was GEAR UP money, Teacher Quality Money; that was other federal grant money administered by Mid Central,” Wyland said.

Wyland says there is plenty of blame to go around.

“Mid Central didn’t oversee the non-profits, AIII and OSEC. They didn’t oversee the individuals involved. And the State of South Dakota didn’t oversee Mid Central as it should have. And quite frankly, the Federal government didn’t do proper oversight over the State of South Dakota,” Wyland said.

Based on the grant applications Wyland reviewed for KELOLAND News, he doesn’t believe South Dakota should ever have received the GEAR UP grant money in the first place back in 2005. 

“Because it was poorly written and non-compliant, particularly in the area of local match. Based on the evaluation reports of the 2005 GEAR UP grant, the 2011 GEAR UP grant never should have been awarded to the State of South Dakota,” Wyland said.  
Wyland believes that that Auditor General’s report will be used in the class action lawsuit against Mid Central and the South Dakota Department of Education. It’s been filed by Native American students who say they didn’t get the services promised in the grant. 

Auditor General Marty Guindon tells me that this is the extent of the Department of Legislative Audit’s reports, unless the Government Operation and Audit Committee requires additional ones.